Friday, November 30, 2007

ULCRA repealed, finally

The Maharashtra Government finally repealed the Urban Land Ceiling Regulations Act (ULCRA) yesterday. Some of my quick thoughts on the impact of this move.

Positives
- Boost for transparency in a sector which badly requires it
- A probable end to land grabs by politicians and bureaucrats
- Easier access to Central Government's funds for Mumbai's infrastructure projects
- Longer-term real-estate supply now available, should aid stability for prices
- Red tape cut and therefore quicker clearances for real-estate projects

Negatives
- Potential for land-hoarding by owners, unless the Government gets serious about the proposed tax on vacant land on that part of land not being used for development by the owners
- No immediate impact on property prices, given that the land freed from ULCRA will take at least a couple of years to develop
- Not a definitive answer to the housing problem for Mumbai; although the Government has said that acquired land will be given to MHADA and MMRDA for low-cost housing, chances are owners will go to court on this. Besides Government sponsored housing schemes are prone to misuse as well as lack of transparency.

Update: Various newspapers are giving different numbers for the exact quantum of land released with the ULCRA repeal. Today's DNA, seems to make sense, so here's a summary.

Total Land declared surplus by the Govt since 1976=17,000 acres
Of which, land declared exempt=12,000 acres
Approx. balance surplus land to be used for low-cost housing=5,945 acres
Of which, land declared exempt (again)=1,827 acres
Which leaves a balance of=4,118 acres
Of which, Govt. orders acquisition of=3,500 acres
But acquires only=2,282 acres (challenged by owners and stayed by courts)
Actual land to be made available now=1,218 acres